THE NEW FACE OF GLOBALIZATION - By : Karl Moore and David Lewis

Globalization is widely perceived as a macro-economic driver that emerged with the
deregulation of financial markets and trade liberalization in the last quarter century.
But Karl Moore and David Lewis contend that there is nothing new about it, it is
simply putting on a different face. If past is prologue, they write,“history provides a
clue as to globalization’s future.”
La mondialisation est généralement perçue comme un phénomène
macroéconomique né de la dérégulation des marchés financiers et de la
libéralisation des échanges du dernier quart de siècle. Mais ce phénomène n’a rien
de nouveau, affirment Karl Moore et David Lewis, pour qui il a simplement changé
de visage. Si le passé est le présage du futur, écrivent-ils, « l’histoire offre un bon
aperçu de l’avenir de la mondialisation ».

Who will lead the global economy in the 2010s ?
Will it be the United States ? Will it be China
and India ? Or will it be someone else ?
Globalization is nothing new. We can loosely define it as
the closer economic and cultural integration of nations on a
worldwide scale. Globalization involves free movement of
goods, people, ideas, culture and money between continents.
The process has a long history A hemispheric economy
existed in ancient and medieval times. The first global economy
was agricultural. It was started in the 1500s by the
Spanish and Portuguese, but they were soon upstaged by the
Dutch and eventually the British.

The second global economy was industrial and led by
Great Britain. Parliament approved free trade in the 1840s.
The telegraph, the railroad and the steamship linked this
economy together. London bankers financed it and British
gunboats upheld it. The British pound became its currency.
Colonists in Canada, Australia, New Zealand and South
Africa and the people of the United States, Latin America,
India and South America provided investments and markets.
This whole structure was mortally wounded in the
First World War and it died during the Great Depression
and the Second World War.

Communism engulfed Russia and China and much of
Eastern Europe. Joseph Stalin and his successors created
Comecon, a Marxist version of globalization. As the British
Empire crumbled, the United States filled the vacuum, forging
a free world Cold War economy based on military
spending and welfare state economics.
New technologies paved the way for the third, postindustrial
global economy. Jet travel, satellite communications,
multinational corporations, cable television, fax machines, fibre optics and the personal computer were
ready when the Iron Curtain fell in 1989. The Internet was
soon to follow.

The globalization era itself began with a sudden, unexpected
shift in the course of world history. The Cold War
seemed permanent until Mikhail Gorbachev could no
longer afford to shore up the Soviet Empire in east-central
Europe. In 1989 the Warsaw Pact dissolved, followed two
years later by the Soviet Union itself.

The quick unravelling of Soviet Communism was the
most spectacular event in a gigantic global shift. Chinese
Communism survived, but only in the rule of the
Communist Party. Democratic Socialist parties fled into opposition
and abandoned their platforms. Even capitalist models
toppled. Japan endured a real estate crash and fell into permanent
recession. Not only GE, GM and IBM but Daimler and
Nissan abandoned lifetime employment and sacked thousands
of workers. Marx and Keynes were dead and Milton
Friedman and Jack Welch anointed in their stead.

The new economy weakened hierarchies and regulators.
Established companies and middle managers became
losers, innovative entrepreneurs winners. The nation-state
and national economies long provided a moderating force in
capitalism. Many firms, such as IBM and Hewlett Packard,
were highly employee-centred. This was even more true in
Europe and Japan. Paternalistic companies and Keynesian
economics served as windbreakers against market forces.
Now, in the 1990s those windbreakers were gone, and
Americans and Europeans began to feel the full brunt of economic
competition from Latin America and even more from
China, Korea, India and other rising Asian producers.

Karl Moore is an associate professor at
McGill University and an associate fellow
of Green Templeton College,
University of Oxford. David Lewis
teaches at Citrus College in Glendora,
California. They are the co-authors of
The Origins of Globalization
(Routledge, 2009).